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It has invested 50 million euros in its factory in Tenerife and buys tobacco leaf from Extremadura to contribute to the local economy

Tom Osborne, general manager of JTI Iberia

Japan Tobacco International plans to transfer its European duty-free operations to Spain and establishes its global information technology hub in Madrid

Sector:
Ecommerce-related ICT services related
Country:
China

Spain is important to Japan Tobacco International (JTI), as evidenced by the 50 million euro investment it has made in its Tenerife plant in recent years. The multinational is also one of the most important in the tobacco and vaping sector worldwide, and is a regular purchaser of tobacco leaves from Extremadura. Two years ago it opened the new offices of its global information technology (IT) hub in Madrid, from where it provides service to the whole company. JTI has been recognized as one of the best companies to work for in Spain and worldwide, and soon plans to transfer the commercial center of its European duty-free operations from Greece to Spain.

 

JTI Osborne

What is Spain's importance to JTI's strategy?
Since we began operating in Spain 20 years ago, this market has been key in terms of volume for the growth of our company in Europe. During this time we have tripled our market share. These are exceptional results if we take into account that in mature markets like Spain, the changes in market share are very small and an increase of only one point requires a major effort.

What plans do you have for your Tenerife plant?
Our factory in Tenerife is currently the most important large-scale industrial tobacco production center at present in Spain. In recent years it has acquired greater weight within the total of JTI factories in the world. For example, European cigarette production is centralized from Tenerife. We have surpassed other plants located in Germany and Poland and transferred the production of cigarettes in soft packs from Romania to Tenerife. Without question the 50 million euros we have invested in this last decade to equip the center with the latest technology and machinery has been key, but it is not the only factor. Our decision to invest in the Canary Islands also responds to the know-how of our team there and to the production and investment incentives available in the archipelago.

The consumption of tobacco has stabilized after some years of sharp decline. How risky is it for you to continue investing?
I'm optimistic about the future, as although our sector has for some time been experiencing change in its operational environment, our market share has continued to grow. Our goal is to carry on doing so in a sustainable way. We want to go on investing and committing to Spain, but to do so – like any other economic agent –, we need a stable and predictable regulatory framework. We are also selling a product that carries a tax burden of over 80% of its price to the public, so we must be sure that the current tax structure is up-to-date and suitably balanced to ensure not only the sustainability of our industry but also the tax revenues for the government – in excess of nine billion euros a year – and better compliance with the objective of public health and protection of minors in terms of access to tobacco.

Why did you choose Spain to install a worldwide IT center?
Spain was competing with another 19 geographic hubs. Our parent company chose Madrid for the high degree of qualification and experience of our local team in managing major projects. Currently, Madrid is overseeing the upgrade of the company's first technology solution to offer service to JTI's over 45,000 employees. This project has generated new jobs – it began with three employees and now has more than 120 –, it has a positive multiplying effect on the local economy and is a magnificent opportunity to highlight Spanish talent in the area of innovation.

What is your investment in Extremaduran tobacco?
Although JTI is originally a Japanese multinational, we have a distinct Spanish accent. Whenever possible, we opt to invest in Spain. One of the cornerstones of our approach to business is to support the tobacco value chain and contribute to its stability. Tobacco cultivation in Extremadura is a source of income for over 20,000 families. We buy tobacco leaf from Extremadura because of its high quality and we use it to prepare our products in our factories. Since 2013 we have had an agreement with the Ministry of Agriculture, which we have renewed, whereby we commit to acquiring a certain number of tons of tobacco leaf over a period of three years.
 

 

JTI logo

 

Last updated: 23|01|2020

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